AEY-Investor-Presentation-Summer-2020

ADDvantage Technologies Group, Inc (Nasdaq: AEY) Investor Presentation Summer 2020 Safe Harbor Statement The information in this presentation may include forward-looking statements All statements, other than statements of historical facts, which address activities, events or developments that the Company expects or anticipates will or may occur in the future, are forward-looking statements These statements are subject to risks and uncertainties, which could cause actual results and developments to differ materially from these statements A complete discussion of these risks and uncertainties is contained in the Company’s reports and documents filed from time to time with the Securities and Exchange Commission Investor Highlights ADDvantage Technologies distributes Telco Core network equipment and services; and provides installation services for a comprehensive line of Wireless technologies supporting 5G upgrades Positioned to attack a $275 B market opportunity in 5G network buildouts across the U.S Opportunity for high, double-digit revenue growth and with a diversified core across wireless services and telco network equipment Managed by experienced executives and leveraging long-term industry relationships to expand Highly fragmented industry— 100’s of players specializing in a variety of service and product offerings in the value chain; ample opportunity for M&A beyond organic growth Top Wireless and Wireline Companies are Customers — VZ, AT&T, TMobile, Dish, Century Link, Frontier, Windstream and Zayo A telecom micro-cap play, optimized for top-line growth, margin expansion and future up-listing $55.9 Million in Annualized Revenue ($ in millions, TTM thru Q3 2020) Two reporting segments… three divisions Telco Wireless $29.3 $26.6 Equity Snapshot Market Cap Shares Outstanding Share Price (as of 8/25/2020) $28.1 million 11.8 million $2.38 Market Overview: Evolution of Communications 5G service expands the capacity for more mobile networks and allows more devices to use the network than ever before Late 1990’s Late 2000’s Late 2010’s 3G 4G 5G 348 kbps-2 mbps 10-100 mbps Gpbs • Voice • Text • Beginning of “mobile internet” • High speed internet • Data, apps • HD TV, video conferencing • Extremely high data rate • Higher capacity • Ultra low latency • Reliable, resilient, secure • Supports many more devices… IoT Market Overview: 5G Explained 5G will enable the next evolution in connectivity and unleash a flurry of new use cases for mobile computing 5G features… … elevate network performance to enable a massive shift towards truly robust IoT ecosystems 100% Up to 10Gbps data rate… 10 to 100X > 4G millisecond latency • • Coverage • • • • 99.999% availability 90% reduction in network energy usage Healthcare… monitoring systems and remote surgical operations Driverless car navigation Massive data analytics for enterprise cloudbased services Drone and robotic applications Virtual reality gaming… brings VR to the masses Home inter-connectivity for consumers Up to 100X connected devices per unit area Market Overview 5G market is poised for significant growth creating enormous demand for service providers Global 5G Market is Poised for Skyrocketing Growth 5G Network Construction Market ▪ 5G represents a meaningful opportunity for incremental growth for wireless carriers and US Capex growth to $37B by 2022 ▪ Number of small cells deployed in the U.S is expected to increase ~10X by 2026 from 80k sites to >800,000 by 2025… creating a tremendous opportunity for a Ground Technician workforce Source: Deutsche Bank Research, Mobile Experts, S&P Global Market Intelligence ~$18B Served Market Additional Target Markets ~$15B Southeast Mid-Atlantic regions of U.S ▪ Upcoming changes in the 5G market are expected to have a tremendous ripple effect through the component and services ecosystem ▪ Dish Wireless is a new entrant and must build a new network and cover 70% of US Pop by 2023 or 70k new sites Total Market Opportunity 154,000 Active Cell Towers & Small Cells ▪ All of the operators have stated intent to invest to deliver faster 4G AND to pave the way for widespread 5G deployment ▪ Sprint / T-Mobile merger enhances market opportunity due to network rationalization plus removal work of >60,000 cell sites $275B Focusing on geographic expansion to markets adjacent to our existing operations and to expand our portfolio of Wireless Services Source: CTIA 2019 Market Overview: Key Industry Trends in What We Do 5G presents numerous opportunities in Wireless Infrastructure Services ▪ Continued densification of networks required to meet growing bandwidth requirements nationwide CAGR of 5G Connections is Expected to be 232% thru 2025 Source: wirelessweek.com U.S 5G in 2025 ▪ Big need to expand… cost for upgrades averages $30-$70K per site, DISH needs to build a new network ▪ >300k macro cell sites in the US will be upgraded to 5G by 2025 ▪ Small Cell installations average ~$20K per site for installation services ▪ Number of small cells deployed in the U.S is expected to increase nearly 10x from 85,000 at the end of 2019 to 800,000 by 20261 ▪ $250B in Capex spend in next years on Fiber and Wireless networks in the US Source: CTIA Market Overview: Drivers of 5G Transition Several factors will be the key to accelerating the transition to 5G Upgrading radios and antennas at every cell site Increasing density of tower and street side cell Adding connections to fiber cables at every cell site Adding more tower crews Our Business: Serving the Wireless Market Through our Fulton Technologies Division, we serve carriers, OEMs and integrators as they build out 5G wireless towers Delivering the complete implementation life cycle of tower and cell site technology upgrades… Currently serving Southwest and Midwest regions of U.S… • • Plan Upgrade Design OR Operate Build Optimize • Install Integrate …with a focus on safety, quality and execution at every turn • Acquired Fulton in January 2019 Provide turnkey construction and integration services to all of the Tier wireless carriers, operators and OEMs Master Service Agreements with every major carrier, OEM and integrator Employees with 30+ years of service …with plans to expand from 14 to 27 states Our Business: Where We are Going Leveraging long-term industry relationships to expand aggressively Target Tier Providers Be a highly sought-after resource for all major carriers to drive margin improvement Build-out Suite of Services Expand offerings to include fiber backhaul, site acquisition and integration Expand Geographic Footprint Leverage existing footprint throughout Central US… look for SE & Mid-Atlantic expansion opportunities Build Multi-regional Platform Weave together multiregional platform through a series of acquisitions 10 Our Customers Wireless Infrastructure Services Broad and Diverse Base of Customers Our largest customer accounted for ~12% of sales in FY 2019 Telecommunications Our largest five customers accounted for 37% of sales in FY 2019 11 Our Business: Revenue ready to take off in 2021 after 4G to 5G gap in 2020 Wireless segment quickly offset impact from sale of cable TV segment Quarterly Revenue by Segment $17.3 $11.3 $17.9 $8.8 $7.9 $4.2 Q2 FY19 Wireless $14.0 $7.2 $8.7 $6.8 Q1 FY19 $17.6 Telco $8.7 $10.0 Q3 FY19 Q4 FY19 $6.8 Q1 FY20 Revenue Highlights ▪ Near-term market shocks caused by pandemic stifled revenue growth in most recent quarters $12.0 $12.0 $7.3 $6.9 $4.7 $5.1 Q2 FY20 Q3 FY20 USD in millions ▪ Expected investments by large wireless providers have been in a holding pattern, impacting 2020 sales ▪ Quarter-to-quarter fluctuations generally reflect seasonality of business ▪ Wireless business began in Q2 FY19 with purchase of Fulton Technologies Note: Cable TV business was moved to Discontinued Operations and is not included in the Revenue numbers Totals may not foot due to rounding and inter-company transactions 12 Our Business: Summary Balance Sheets: Cash will be 2X Debt by FYE As of 6/30/2020 Solid Balance Sheet As of 9/30/2019 Cash and cash equivalents $10,365,744 $1,242,143 Accounts receivable, net of allowance $3,164,893 $4,826,716 Inventories, net of allowance $5,964,490 $7,625,573 Total current assets $23,015,806 $18,965,147 Total current liabilities $13,377,465 $7,203,793 $7,552,332 $ Total shareholders’ equity $15,880,590 $29,446,600 Total liabilities and shareholders’ equity $36,109,590 $36,828,344 1.7:1 2.6:1 Total debt Current ratio 13 Strategy: Year Plan >10% EBITDA Organic Growth of Core business 5G Carrier Capex Investment Aggressive M&A Program Expansion of Geographic Footprint $277M Enhanced Suite of Services Focus on Operational Excellence $50M Revenue $28M Leverage of Overhead EBITDA ($6M) 2020 2023 14 Leadership Joe Hart, President and CEO Appointed President and CEO in October 2018 Prior to joining the Company, Joe was the CEO of Aero Communications, a private equity owned company that performed installation, maintenance, and network design & construction for the telecommunications industry From 2006 – 2014, Joe served as the EVP of Network Infrastructure Services and Wireless Operations for Goodman Networks, a provider of end-to-end network infrastructure, professional services and field deployment to the wireless telecommunications industry For the previous 25 years, he served in various executive leadership positions at AT&T and other various telecommunication and wireless companies Joe holds a M.S in Systems Management from USC and B.B.A from Baldwin-Wallace College Jimmy Taylor, President Wireless Jimmy is a 35-year veteran of the wireless infrastructure and telecommunications industries He has extensive experience in both operational leadership and business development He started his career at Houston Cellular and PrimeCo PCS and then joined Crown Castle International, one of the world’s largest tower asset management companies He was the Regional VP of Southwest Operations for Crown Castle for almost 10 years, where he was responsible for site development, deployment and leasing operations He was VP of Site Development at Goodman Networks and President of the Teltech Group and Cotton Telecom Jimmy holds a B.B.A from the University of Texas at Austin and a B.A from Angelo State University Jarrod Watson, Chief Financial Officer Jarrod joined the Company with more than 20 years of experience with large organizations Fortune 500 companies including Yum Brands (NYSE: YUM) and McKesson (NYSE: MCK) Prior to joining ADDvantage, Jarrod served as CFO of Southland Holdings, a large privately held heavy civil construction company During his time there, he led several large transformation initiatives designed to position the company for growth Prior to that, he served as Head of Business Analytics & Forecasting for Pizza Hut US Jarrod received an MBA from the Owen Graduate School of Management at Vanderbilt University and is licensed as a Certified Public Accountant Reggie Jaramillo, President Telco Reggie began his career with ADDvantage Technologies in 2019 serving as the company’s Director of FP&A He was born into an entrepreneurial family and grew up working in the Leal’s Mexican Foods family restaurant businesses located in West Texas and Eastern New Mexico Prior to joining the company, Reggie worked for 15 years in the telecommunications industry for Cox Communications, Time Warner Cable and most recently Suddenlink Communications where he spent 10 years serving in various fiscal and operational leadership roles, which included VP of Fiscal Operations, VP of Business Planning, and VP of Field Operations He holds a B.B.A from Midwestern State University, an MBA from Texas Tech University, and is nearing completion of a M.S in Accounting from Texas A&M University-Commerce 15 Contacts Company Contact Jarrod M Watson, Chief Financial Officer ADDvantage Technologies Group, Inc., Dallas, TX Tel (918) 251-9121 | www.addvantagetechnologies.com For more Information Investor Relations Brett Maas, Managing Partner Hayden IR Tel (646) 536-7331 | www.haydenir.com 16